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U.S. labor markets have recovered 4 million of the nearly 9 million net job losses from the early 2008 peak. … Yet looking at the overall labor market, millions of unemployed individuals appear to fall in between these extremes. By our estimate, nearly 3 ½ million more workers were employed in 2008 than in 2012 in U.S. industries far removed from the housing bubble.

These individuals didn’t just suddenly lose their marketable skills and knowledge. More simply, recovery at its present trajectory seems far from strong enough to re-employ them, along with other new entrants to the labor force. A very wide range of labor market indicators show an unusually limited improvement and long duration of weakness, significantly different from other post-war recoveries.

The overall level of job seekers still dwarfs open positions regardless of any new skill mismatches. This does not seem due to a particularly unusual labor market response to economic growth .

It’s because of the slow pace of recovery relative to the sharp drop of 2008-2009. As we will detail in this essay, economic growth is closing the estimated “U.S. output gap” at the slowest pace of the post war period, and this should carry a message for policymakers.